S Korean Prosecutors to Probe ex-Kakao CEO Over Crypto ‘Embezzlement’ Allegations
South Korean prosecutors will launch a “full-scale investigation” into the former CEO of the tech powerhouse Kakao over crypto “embezzlement” claims.
Chosun Ilbo reported that the case will be handled by the Seoul Southern District Prosecutors’ Office’s Virtual Asset Crime Joint Investigation Unit.
Prosecutors will probe the tech giant’s founder and former CEO Kim Beom-su and fellow Kakao executives.
Kim and others have been accused of embezzlement and breach of trust.
The executives have also been accused of conducting fraudulent transactions, in violation of the terms of the Capital Markets Act.
A civic group named Economic Democracy 21 (literal translation) last month filed a legal case against Kim.
It also accused “key officials” involved with the Kakao-operated Crust (aka Klaytn) ecosystem and Ground X, Kakao’s blockchain subsidiary, of wrongdoing.
Kim Kyeong-yul, the head of Economic Democracy 21, has been summoned by prosecutors, who want to hear more about the allegations.
Kakao is one of South Korea’s biggest tech firms.
It operates KakaoTalk, the most popular chat app in the nation.
Some 90% of South Korean smartphone owners use the app.
Kakao also operates a crypto exchange-partnering neobanking operation named KakaoBank.
And the firm launched the KLAY token through its overseas subsidiaries, in addition to a popular crypto wallet that debuted in 2020.
The firm was one of the first backers of the market-leading “unicorn” exchange Upbit, and many Upbit executives are former Kakao employees.
But Economic Democracy 21 claims that “a small group of Kakao insiders” made “illegal profits” via illicit KLAY transactions.
This, they claim, was mainly done by selling coins to investors, and then “embezzling the money instead of using
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